KUALA LUMPUR (Sept 6): CIMB Group Holdings Bhd announced it will acquire the entire equity stake in dormant stockbroking firm Jupiter Securities Sdn Bhd for RM55 million.

CIMB said in a filing today its wholly-owned unit CIMB Group Sdn Bhd has inked a Share Purchase Agreement (SPA) with shareholders of Jupiter Securities for the acquisition.

Jupiter Securities, together with its four subsidiaries, has a combined paid-up capital of RM24.59 million. The firm is a 74.43% subsidiary of Olympia Industries Bhd.

“The purchase consideration was arrived at after taking into consideration, among others, the consolidated net assets of Jupiter Securities and the realisable benefit of the unutilised tax losses and unabsorbed capital allowances carried forward of Jupiter Securities and its subsidiaries,” said CIMB.

“The proposed acquisition is a strategic initiative taken by CIMB Group in connection with its proposed partnership with China Galaxy International Financial Holdings Ltd, a subsidiary of China Galaxy Securities Co Ltd, wherein Jupiter Securities shall be the platform for the partnership’s Malaysia operations,” it added.

CIMB formed a joint venture with China Galaxy to co-operate in the stockbroking business, both in Malaysia and overseas. Analysts estimated that the JV, which should kick off sometime this year, will save CIMB some RM300 million in operating costs annually.

The acquisition was made mainly for Jupiter Securities’ stockbroking licence, which is needed by the CIMB-China Galaxy JV to commence operations in Malaysia.

CIMB already has a stock broking licence, but that is solely for its current investment banking arm, CIMB Investment Bank Bhd.

In a separate filing, Olympia Industries said it will convert its redeemable convertible preference shares (RCPS) in Jupiter Securities to up its stake to 76.55%, which will allow it to get RM42.1 million from the SPA with CIMB.

“The total estimated gain from the proposed disposal is RM24.6 million, based on the latest audited financial statements of Olympia Group for the financial year ended Dec 31, 2016,” said Olympia Industries.

Of the proceeds, Olympia Industries said it will use RM15 million to repay borrowings, while the balance will be used as working capital.

It expects the proposed disposal to be completed by the first quarter of 2018.

At 5pm, shares of CIMB Group closed 0.15% or 1 sen lower at RM6.75,  giving it a market capitalisation of RM61.1 billion. Year to date, the stock has climbed near 50%.

Meanwhile, Olympia Industries' shares slid 3.33% or half a sen lower to 14.5 sen, for a market capitalisation of RM153.52 million. Year to date, the counter has jumped some 93%.